On January 1, 2008, Centurian Corporation purchased 40% of the outstanding stock of Street Kings Corporation for $750,000. Net income reported by Street Kings Corporation for 2007 was $110,000. Dividends paid by Street Kings Corporation during 2007 were $65,000. The long- term investment will appear on Centurian Corporation's December 31, 2008 balance sheet at:

Question

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The long-term investment will appear on Centurian Corporation's December 31, 2008 balance sheet at $768,000. This is because Centurian Corporation purchased 40% of the outstanding stock of Street Kings Corporation for $750,000 on January 1, 2008. During 2007, Street Kings Corporation reported net income of $110,000 and paid dividends of $65,000. Centurian Corporation's share of Street Kings Corporation's net income for 2007 is $44,000 (40% x $110,000). Centurian Corporation's share of Street Kings Corporation's dividends for 2007 is $26,000 (40% x $65,000). Therefore, Centurian Corporation's long-term investment in Street Kings Corporation will appear on Centurian Corporation's December 31, 2008 balance sheet at $768,000 ($750,000 + $44,000 - $26,000).

On January 1, 2008, Centurian Corporation Purchased 40% of the Outstanding